In a big relief for the Chandigarh Housing Board (CHB), the Punjab and Haryana High Court has stayed the recovery of over Rs 300 crore by the Income Tax Department. In June 2010, the Income Tax Department had slapped notices on CHB to cough up over Rs 300 crore as the income tax on the amount it received from the deal with realtor Parsvnath.

The stay was granted by the High Court on an appeal filed by the CHB. The appeal has been admitted and the recovery/notices have been stayed till further orders.

New Delhi-based realtor Parsvnath Developers Ltds Pride Asia project in Chandigarh is stuck in arbitration with the CHB.

The project, which was expected to generate a revenue of Rs 4,500 crore, allegedly did not receive a portion of the 123-acre land committed by the CHB for the development of residential and commercial property. As per available information, Parsvnath had paid Rs 516 crore to the housing board between 2006 and 2008 as per the schedule in their agreement. The company had also invested close to Rs 300 crore on publicity and building of sample flats.

At Rs 7,150 per square feet, the cost of flats ranged from around Rs 50 lakh to Rs 2 crore. The project also offered penthouses and villas ranging from Rs 2 crore and Rs 6 crore. However, construction could not be taken up due to arbitration even as the buyer-seller agreements were signed in 2008.

Pride Asia went into arbitration in 2009 as the amount that Parsvnath had put in an escrow account was frozen by the CHB. Additionally, the CHB also imposed penalty on the developer for allegedly violating the terms of the agreement. In June 2010, the Income Tax had issued notices to the CHB to pay up Rs 300 crore as the income tax on the amount it received from the deal with Parsavnath.